If investment spending depends on GDP, this is called induced investment.
Answer the following statement true (T) or false (F)
True
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
As output increases, economies of scale occur when the
A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant. E) long-run fixed cost decreases.
When cost and demand are stable over time in an industry, repetition of Prisoners' Dilemma situations
A) can yield cooperative outcomes because firms can explicitly collude to set prices. B) can yield cooperative outcomes even when firms do not explicitly collude to set prices. C) cooperative or noncooperative outcomes may occur, but cooperation is harder than when the market is unstable. D) will tend to yield noncooperative outcomes. E) will always yield noncooperative outcomes.
Which of the following factors would be most likely to encourage capital formation in a less-developed nation?
What will be an ideal response?